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Author Phil Hill

University of Arizona FAQ on Ashford University Agreement for UA Global Campus is Deeply Flawed

By 2020-08-057 Comments

On Monday I wrote a post describing the University of Arizona’s agreement to acquire for-profit Ashford University to create a new University of Arizona Global Campus that sounds a lot like Purdue University Global. I was and continue to be deeply skeptical of the wisdom move on the part of Arizona.

[UA President Robert Robbins]: “It’s like a baseball team. You can either build a professional team through your farm system in-house, or you can go to the free-agent market and bring in a star player. The problem is that now, few institutions have the money to invest internally.”

From my perspective, Zovio is making a smart move with this deal, addressing real problems, but the University of Arizona seems to be distracted and solving the wrong problems. UA might be signing a free agent, but that new player won’t even play for the professional team despite wearing a similar uniform, when the actual team is playing in an elimination tournament and needs help. [snip]

What I mean by prestige is that it is clear that Arizona president Robbins was motivated and inspired by both Purdue University’s deal and with ASU’s online footprint. Call it a case of Mitch Daniels envy, or Mitch and Michael envy.

Predictably (and noted in my post), there is already strong pushback from UA faculty groups, as described at Inside Higher Ed.

In a three-hour Faculty Senate meeting late Monday, many professors echoed these concerns, expressing frustration and anger at what they characterized as a lack of transparency demonstrated by university leaders. Aside from discussing the Ashford acquisition, meeting attendees also scrutinized the safety of the university’s reopening plans and questioned whether looming faculty furloughs are necessary to offset a projected $250 million budget shortfall caused by COVID-19. 

Yesterday UA put out a FAQ document (embedded below) intended to address many of the concerns from faculty groups, and others in the UA community. But I fear the UA leadership has made the problem worse due to the deeply flawed arguments laid out in the FAQ.

Extending Reach

The best argument in the document addresses the question “Why is the University Establishing Global Campus?”

University of Arizona Global Campus will benefit the University of Arizona in several ways:

1)Extends the University of Arizona’s land-grant mission by offering online educational opportunities and access to a diverse groupof students.

2)Embraces the opportunity to serve more international students—regardless of geographic location—who will benefit from the enhanced learning environment and resources provided by University of Arizona Global Campus.

3)With approximately 35,000 initially enrolled students, Global Campus will engage a diverse student body from around the country that is currently:▪88% over the age of 25▪32% African American▪15% Hispanic▪70% women▪56% Pell Grant recipients▪25% associated with the military▪76% from the South, Midwest or Northeast

These statements are all accurate. But what this positioning doesn’t address is the fateful year 2020 and the pandemic. Are these really the problems for UA to address and invest in when they are facing an existential threat with their current student students, faculty, and staff? If UA was already investing in the improvement of online and hybrid education, and student support at a distance, without major furloughs and pay cuts, then this argument of extending reach might make more sense. But in combination, UA Global Campus investments to extend reach seems a poor decision.

4)Generates significant revenue for the University of Arizona and opportunities to substantially increase Arizona Online enrollment through transfer pathways.

Revenue is not the same thing as operating income or profit. Yes, Ashford University generates hundreds of millions of dollars of revenue, as will UA Global Campus (tomato, tomahto), but what evidence is there that the new organization will generate actual operating revenue that helps the university at large? Obviously the Purdue Global comparison is the most useful one – land grant university acquires for-profit schools with large but declining enrollments to create separately-run unit with very different student populations. How has that move gone for Purdue Global? In its first fiscal year, the school lost $43 million in operating income due to required investments of $132 million in marketing and student recruitment alone to attempt to stabilize and reverse enrollment trends.

5)Positions Arizona Online and Global Campus together as preferred leaders in online education worldwide.

See statement above about Mitch Daniels and Michael Crow envy. What exactly is a “preferred leader”, other than cocktail party invitation and media coverage fodder? UA has real issues to address.

There are some useful answers on the relationship of UA Global Campus to the existing UA Online group (you know, the group that is serving current UA students, faculty, and staff) and UA Global (the group trying to expand UA’s international student population within the main university). Short answer – they have different missions and “different faculty, programs and accreditation of the two universities”.

Why financially invest in a new university at such a challenging time for the University of Arizonaenterprise?

The establishment of Global Campus provides a compelling opportunity to reach a diverse group of approximately 35,000 students in furtherance of our land-grant mission. Moreover, University of Arizona Global Campus is investing only $1 to acquire Ashford University. In return, Global Campus is guaranteed a substantial 15-year income stream of $225 million, including an upfront payment of $37.5 million.

This is delusional. At best.

The completion of this deal would require a much bigger investment than $1, as seen from the Purdue Global example. Consider this chart from the blog post where I shared PG’s financials.

Read the original blog post to understand the accounting details, but the point is that Purdue Global lost tens of millions of dollars, with the need to invest $132 million in marketing and student recruitment in the first year alone, despite up front payments from Kaplan to Purdue. Purdue University claims that they have stabilized the enrollment declines and may break even, but we won’t see the real financials for FY20 until October.

What makes the University of Arizona think their situation will be different? At the very least, the belief that the only investment is $1 is incredibly naive. It takes real investment and effort to turnaround a faltering online school. Ashford University’s enrollment has been falling since 2011, and UA Global Campus would need to spend heavily to reverse this trend.

Global Campus will enter into an affiliation agreement with the University of Arizona, with upfront and ongoing payments to the University of Arizona that will have both immediate and long-term positive impacts on our university’s fiscal health. Notably, we anticipate using initial revenues once the transaction closes in December to help alleviate the financial burden that we are currently facing.

This statement assumes that the upfront payments from Zovio (parent company of Ashford) will immediately go into UA’s general fund. But as I am trying to show above, that money will be needed for the massive effort to turnaround UA Global Campus enrollment trends. Again, why does UA think their situation will be different than Purdue’s? If they have an answer to this question, they should address it publicly. And I truly hope that UA leadership did their homework on Purdue Global finances since they are public now (you’re welcome).

How much will Zovio make each year?

Zovio will receive 19.5% of the annual tuition revenue for the duration of the 15-year partnership in exchange for providingeducation technology services,only after priority payments to Global Campus totaling $225 million.

This is just plain wrong and deliberately misleading. Zovio will receive fees to cover their operating costs as the OPM (or educational services) provider for UA Global Campus. AND they will receive 19.5% of annual tuition revenue. How significant is this point? Look above at the Purdue chart and note that “marketing” and the two “KHE” lines got to Kaplan Higher Education (their OPM provider). Or you can look at KHE financials from parent company Graham Holdings earnings reports, which show KHE making $305 million in 2019, the vast majority of which comes from Purdue Global.

What does this mean for current University of Arizona students and employees?

There will be no disruption or impact to University of Arizona students, faculty and employees.The University of Arizona will provide opportunities for students enrolled at University of Arizona Global Campus to experience our Tucson campus and programs, but there will be no expectation or requirement that they do so.

Exactly. UA Global Campus does nothing for current UA students and employees.

Sorry for the ranting nature of this post, but this decision, process, and explanation from the University of Arizona leadership has major flaws at a time when efforts to improve online and hybrid education for current students should be paramount.


Update 8/5: Embedded FAQ document above for those who cannot access University of Arizona link.


  • Phill says:

    Did you do any research? Please try to consider how growth in a market works…

  • Phill says:

    Literally, just trying to help you understand.

    • Phil Hill says:

      Can you be more specific with your question / comment? Happy to discuss details but need to know what you’re implying or saying.

  • Did the Board of Regents approve of this acquisition and underlying sole-source contracts with Zovio? Are these public documents?

  • DT says:

    As a graduate student and Research/Teaching Assistant at UA and alumnus of ASU, I find this post both interesting but rooted in too many assumptions. It’s not difficult to be wary of the financials and even the president’s motivations here, but I think the COVID reality we find ourselves in warrants some consideration. No reasonable person would enter into such an agreement in this economic climate that didn’t have certain financial safeguards in place. That would be ludicrous. To assume that the UA wouldn’t use the mistakes of Purdue Global as a benchmark for what not to do isn’t giving them enough credit. From my seat, the University as an institution hasn’t done much in the way of ramping up the development of Online resources (Arizona Online) in response to COVID. Much of this was left to the University’s Colleges and Departments to figure out. It’s no secret that Robbins opted for the free agent here over pulling from the farm organization, but that isn’t enough to conclude that the free agent won’t deliver or that his contract looks identical to the last free agent to make a similar run.

    • Phil Hill says:

      Fair enough, and I acknowledge that there are assumptions involved. This is the key paragraph [emphasis added in comment]:

      This statement assumes that the upfront payments from Zovio (parent company of Ashford) will immediately go into UA’s general fund. But as I am trying to show above, that money will be needed for the massive effort to turnaround UA Global Campus enrollment trends. Again, why does UA think their situation will be different than Purdue’s? If they have an answer to this question, they should address it publicly. And I truly hope that UA leadership did their homework on Purdue Global finances since they are public now (you’re welcome).

      I am likely to revisit this story today or tomorrow based on some new information on what the deal actually is. But the overall messaging is part of the problem. Not stating where the deal is different than Purdue’s (today’s EdSurge article provides some clarity here), and not providing full answers in the FAQ (in particular the one about how much Zovio will make each year.

      I truly hope you’re right that UA has learned from Purdue’s mistakes, but the school should provide real explanations (in particular sharing the contract structure) and much-better answers to FAQs.